FIRST NEWS | Monthly E-Newsletter
October 26, 2015FIRST NEWS | Monthly E-Newsletter
November 26, 2015Q: May we pay the property taxes for 2015 and insure that 2016 taxes are “not yet due and payable”?
A: Short Answer is “no”. Please read on as Procedural Rule P-20.C.1 contains the phrase “ for the year of the issuance of the Loan Policy or Interim Binder” therefore the “no” answer applies to all transactions closing in 2015 with the date of the policy also being in 2015. However, if the transaction is closing the last of December and the documents will be recorded in January and thus the policy will reflect a date of January 2016, the Schedule B exception may be issued to show that 2016 taxes are “not yet due and payable” if the 2015 taxes are being collected and paid.
The pertinent part of Procedural Rule P-20 reads as follows:
C. TAXES NOT YET DUE AND PAYABLE
In connection with the issuance of a Loan Policy or Loan Title Policy on Interim Construction Loan (Interim Binder), upon payment of the premium in R-24, a Company may:
1. If satisfied that all taxes, standby fees and assessments by any taxing authority for the year of the issuance of the Loan Policy or Interim Binder are not yet due and payable, add the following after the standard tax exception: “Company insures that standby fees, taxes and assessments by any taxing authority for the year _____ are not yet due and payable.” The addition may be made either by checking the appropriate box on a Form T-2 or by otherwise inserting the additional words into the form.
As a reminder, if the “not yet due and payable” coverage cannot be issued, the $5 premium (Rate Rule R-24) may not be collected.